Vector’s battery plan hands control to customers

Somewhere in the basement of Vector’s headquarters in Newmarket, a Nissan Leaf is discharging electricity into the transmission grid that powers Auckland.

The process is called V to G (Vehicle to Grid) and Vector CEO Simon Mackenzie has no doubt it will play a role in how the company’s electricity business works in the future.

“Battery technology is the major development in the electricity sector and along with solar it will change everything.”

Mackenzie and Vector saw the change coming nearly a decade ago and have been planning for it ever since.

“Eight years ago, there was a big change in places like California as they took on the massive challenge of de-carbonising their economies.

“We could also see the trend that customers wanted choice, and new digital technology was going to put the power in their hands."

Vector has completely changed the way its network is engineered. It became the first lines company in the Southern Hemisphere to put industrial-sized batteries in its grid.

The batteries Vector has installed in the suburb of Glen Innes have reduced the amount of electricity it needs to supply the area in peak times by 15 percent.

The way it works is the batteries charge during low demand - therefore lower cost periods - and then discharge into the system in peak periods like early evening. This saves consumers money and is good for Vector's profits.

The losers are generators and power retailers, who are naturally not too happy with Vector. “They don’t like us knocking off the peaks because that’s where they make big money, their lobby group has suggested we should be shut in our kennel!”

But there is no turning back now.

Vector is installing batteries in three of Auckland’s new high growth areas – Hobsonville Point, Warkworth and Tamaki.

Mackenzie says the batteries are a bit like being able to add four lanes to a motorway to cope with peak hour traffic but avoid most of the construction cost.

Auckland’s growth is a big challenge and a big opportunity for Vector. “We are adding the amount of infrastructure like we have in Ponsonby every four months”.

The new infrastructure is not like the old infrastructure, it is being designed so power can flow both ways.

It won’t be long, according to Mackenzie, before a lot more consumers will be selling power generated by solar panels or discharged from Tesla-manufactured batteries.

He says, “early-adopters” are starting to move as technology brings the cost of the equipment down. But economics are not the only drivers.

“Research shows that the number one reason is control. People want to take control of their own power and they don’t want any surprises like disruption of supply or unexpected price rises. The second reason is their concern for the environment," says Mackenzie.

As soon as EVs start to become the norm, Mackenzie predicts people will use the car’s battery to store power purchased at off-peak periods and to either use or sell it in peak periods.

If overseas trends are a guide, consumers won’t just send it back to the electricity retailers but a “peer to peer” market will develop.

The need to be able to integrate multiple sources into its system and analyse supply and demand has led Vector into a major deal with Mprest – an Israeli hi-tech company.

Mprest is well known in military circles for developing the command and control system for Israel’s revolutionary missile defence system “Iron Dome”.

The system’s sensors and software calculates in milliseconds whether a rocket fired by Israel’s enemies will land in an uninhabited area or one where it will kill people.

Israel's "Iron Dome" missile defence system. Photo: Getty Images

If it is heading into a populated area up to four intercept missiles are fired at the target with a success rate above 90 percent.

Mprest has applied these “predictive analytics” to the controlling power grids and according to Mackenzie it is the “system of systems” and far superior to any other product on the market.

“Our system allows Vector to look at the entire picture, it can detect if there is going to be an overload in a sector and instantly bring power in from batteries or EVs in that area or use demand response to switch off hot water systems and eventually things like air-conditioners, this way outages can be avoided and that’s money saved.”

Vector has been so impressed by the mDERMs, it has formed a partnership with mPrest to sell systems to other energy companies in New Zealand and Australia.

“The is nothing else like it because it can connect to existing systems. We had it up and running in six weeks whereas our previous major system upgrade took 18 months,” says Mackenzie.

“Eventually, the whole energy sector will have to move to it as large amounts of renewables come on-line."

Mackenzie says three large entities are already interested in buying the system and Vector is likely to take a shareholding in the Israeli company.

He wasn’t bothered by suggestions that an equity stake could have some blowback on Vector.

Israel recently withdrew its ambassador from Wellington after New Zealand controversially sponsored a UN resolution which condemned its building of settlements in what are known as the “occupied territories”.

“Most of the world’s top multinationals have R&D facilities in Israel and China is moving aggressively to tap into Israel’s innovation expertise. We see it as a pragmatic commercial move.”

Vector is also preparing for significant change in customer behaviour.

It recently brought New York energy expert Rory Christian to New Zealand to brief its board on how technology will put more control in the hands of consumers.

“The relationship between consumers and suppliers is changing, we will soon be pro-sumers,” says Christian.

“It won’t be long before there’s a product on our mobile phones that allows us to track electricity use across all our appliances. Smart coding will allow us to remotely dim our lights, turn down our air conditioners etc. We will know what is going on in every room of our house” says Christian.

“We will have control of energy in our homes in ways we never thought possible. EVs, battery storage and Tesla roof top tiles will mean people can be able to take much more control over the amount they are spending on electricity.”

Vector already has three apps available to consumers. These include its outage app which enables users to track how long it will take to fix a power cut. It plans to soon add video to the app so that people can see the actual incident, for example if a tree has fallen across powerlines.

The company’s vision of the future has seen it buy up some privately-owned companies in recent times.

Power Smart builds large scale solar plants and Eco Power (formerly HRV) specialises in home ventilation, heat pumps and retrofitted double glazing.

The changing nature of Vector’s business (although the bulk of its revenue will always come from its regulated lines business) is also changing Vector’s previously staid image.

“We are being called a tech company now," says Simon Mackenzie, with just a hint of satisfaction.

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